Cross-market Liquidity and Asset Logic: Fundamental Insights from Precious Metals to Cryptocurrencies
As a professional in the cryptocurrency industry, I have always been accustomed to identifying development patterns and trend signals in the crypto sector by analyzing global macro markets and the interconnections among various assets. Recent performances in the precious metals market, unusual movements in the US stock market, and the recent dormancy of altcoins—seemingly independent market phenomena—are actually tightly linked by two main threads: liquidity and macroeconomic indicators. Core concepts such as silver demand, central bank gold purchases, and real interest rates are crucial to understanding cross-market asset fluctuations. Today, I will break down the underlying logic behind these phenomena from my professional perspective and clarify the meanings of related key terms.
1. The Dual Champions of Precious Metals: The Demand Support for Silver and the Consensus of Central Banks on Gold
The precious metals market has always been a 'barometer' of the macro economy. Although gold and silver share the same roots, their differing attributes present different driving logics, and these two logics also form the basis for understanding the precious metals market.
Silver: The Dual Demand from Jewelry and Industry Supports the Price Floor. Silver is a special precious metal with both commodity and financial attributes, and its two core pillars of demand — jewelry and industry — directly determine its fundamental value. In the jewelry consumption sector, silver occupies a stable share in the global jewelry and silverware market due to its high cost-performance ratio and strong design plasticity, especially as consumption upgrades in emerging markets continue to provide incremental demand for silver jewelry; on the other hand, industrial demand is the most growth-oriented part of silver demand and is a core feature that distinguishes it from gold.
The current development in fields such as photovoltaics, electronics, new energy, and healthcare has led to an increasing demand for silver — the silver paste materials for photovoltaic cells, conductive materials for electronic components, and sensor parts for new energy vehicles all rely on the application of silver. From market data, the industrial demand for silver has exceeded 50%, and this rigid industrial demand has become the 'underlying support force' for silver prices, while the demand from jewelry further amplifies its market volatility. In simple terms, the price trend of silver is influenced by fluctuations in the macro financial environment as well as direct impacts from changes in real industrial demand.
Gold: Central Bank Net Purchases Exceeding 1,000 Tons Highlight Core Values of Safety and Reserves
If the core driver for silver is real demand, then the core logic for gold lies in its financial attributes and reserve attributes. The recent news of net gold purchases by central banks worldwide exceeding 1,000 tons has become the most significant positive signal for the gold market. The data behind this reflects a high consensus among various central banks regarding the value of gold reserves.
The net purchase volume by central banks refers to the total amount of gold bought by central banks worldwide within a certain period minus the total amount sold. A positive net purchase volume indicates that central banks are generally increasing their gold holdings. As a hard currency with no credit risk, gold has become the core asset for central banks to optimize their foreign exchange reserve structures and hedge against local currency risks against the backdrop of increasing geopolitical uncertainty and adjustments in the global monetary system. The People's Bank of China has increased its gold reserves for 14 consecutive months, and central banks in Poland, Turkey, and elsewhere are also continuously increasing their gold allocation. The net purchase volume of thousands of tons has not only directly stimulated market demand for gold but also conveyed recognition of gold's long-term value to the market, thus becoming an important support for maintaining strong gold prices.
2. Real Interest Rates: A Core Macro Indicator Running Through the Precious Metals Market
When understanding the financial attributes of gold and silver, real interest rates are an unavoidable core concept and a key link connecting precious metals and macro monetary policy. Its definition is not complicated: real interest rate (true interest rate) = nominal interest rate - inflation rate. It is necessary to clarify two sub-concepts here: the nominal interest rate is the publicly available interest rates we encounter in daily life, such as bank deposit and loan rates and government bond yields, which directly reflect central bank monetary policy; the inflation rate reflects the speed of price increases, representing changes in the purchasing power of money.
The level of real interest rates directly determines the opportunity cost of holding non-interest-bearing precious metals like gold and silver. When real interest rates are negative, it means that the returns from keeping money in the bank or purchasing bonds do not keep up with inflation. At this time, holding non-interest-bearing precious metals not only incurs no opportunity cost but also preserves and appreciates assets, leading to significant inflows into the precious metals market, driving up their prices. Conversely, when real interest rates rise, the opportunity cost of holding precious metals increases, causing funds to flow out of the precious metals market toward fixed-income assets.
For silver, changes in real interest rates will transmit to price trends through financial attributes, while industrial demand will hedge against some of the impacts of interest rate fluctuations. For gold, real interest rates are even more the 'core anchor point' for its price trends, and the actions of central banks buying gold often become more apparent against the backdrop of declining real interest rates and rising monetary credit risks. It can be said that understanding the logic of changes in real interest rates captures the essence of fluctuations in the financial attributes of precious metals.
3. US Stocks: Large Tech Banding Under Limited Liquidity, A Special Product of Market Structure
Turning to the US stock market, the recent continuous rise in US stocks presents a distinct feature: large tech companies are banding together under limited liquidity. This phenomenon resonates with the logic of the precious metals market and reflects the current distribution characteristics of global liquidity. As cryptocurrency practitioners, we also need to pay attention to the liquidity signals behind this trend.
First, clarify the meaning of limited liquidity, which refers to the total amount of funds in the entire financial market not being fully loose; the available liquid funds in the market are relatively scarce, and capital tends to flow toward assets with higher certainty and lower risk. The banding of large tech companies refers to the concentration of funds flowing into leading tech companies like Microsoft, Nvidia, and Apple under limited liquidity, driving the stock prices of these companies to continue rising and subsequently pushing up the US stock indices, while small and mid-cap stocks perform weakly due to capital outflows, forming a 'one versus nine' pattern in the US stock market.
The core reason for this phenomenon is that leading tech companies, leveraging AI technology, stable profitability, and industry-leading positions, have become a 'safe choice' for funds under limited liquidity. In pursuit of certain returns, funds are flocking to these companies; on the other hand, the prevalence of passive investing has exacerbated the banding effect, with funds from ETFs and index funds buying leading companies following index weights, forming a cycle of 'stock price rise - weight increase - funds buy - stock price rise again.'
This trend in the US stock market is essentially the result of uneven liquidity distribution, and the direction of liquidity is also a key factor influencing the cryptocurrency market. This is particularly evident in the performance of altcoins.
4. The Silence of Altcoins: The Liquidity Dilemma in the Crypto Market
Returning to the cryptocurrency market, the most intuitive phenomenon currently is the silence of altcoins, and the core reason behind this is that liquidity has not returned to the crypto market, which is the most palpable point I feel as a practitioner.
First, it is essential to clarify that altcoins are a commonly used term in the cryptocurrency field, referring to all cryptocurrencies other than Bitcoin, including tokens from public chains like Ethereum and Solana, as well as various DeFi and NFT-related tokens. The common characteristics of these assets are higher risk coefficients and stronger dependence on liquidity; liquidity in the crypto market refers to the total amount of funds available for trading crypto assets, including the inflow of institutional and retail funds. When liquidity is ample, funds tend to flow from core assets to risk assets, whereas when liquidity is insufficient, funds concentrate in core assets.
The current liquidity situation in the crypto market exhibits two core characteristics: first, funds are highly concentrated in core assets like Bitcoin, with Bitcoin's market capitalization ratio maintaining a high level for an extended period. Institutional funds are also more inclined to allocate to Bitcoin rather than riskier altcoins; second, the limited liquidity at the global macro level, combined with the tightening stance of the Federal Reserve's monetary policy, has led to reluctance among off-market funds to enter the risk sector of the crypto market.
The development of altcoins is highly dependent on liquidity support. On one hand, when liquidity is ample, the risk appetite of retail and institutional investors increases, making them willing to engage in trading and investing in altcoins, thus driving up their prices. On the other hand, the development of altcoin projects and ecological construction also requires the funding and user support brought by liquidity. When liquidity is lacking, altcoins lack both the impetus of funds and the ability to attract market attention, ultimately falling into a state of 'silence.'
From a cross-market perspective, the concentration of funds in large tech companies reflects the global limited liquidity, and the capital flow in the precious metals market influenced by real interest rates indicates that the crypto market struggles to obtain sufficient external funding injections. This is the macro backdrop for the delayed recovery of altcoin liquidity.
5. Reflections and Outlook on the Crypto Industry from a Cross-Market Perspective
After sorting out the core logic of precious metals, the US stock market, and the crypto market, it is not difficult to find that liquidity is the central clue running through all markets, while real interest rates, asset attributes, and market consensus determine the direction of liquidity distribution among different assets.
As cryptocurrency practitioners, we can derive two key insights: first, the crypto market does not exist independently but is deeply embedded in the global macro financial system. The monetary policy of the Federal Reserve, changes in real interest rates, and asset allocation by global central banks all transmit through liquidity to the crypto market. Understanding the logic of the macro market is crucial to better grasping the trends in the cryptocurrency sector. Second, the recovery of altcoins is inevitably predicated on the return of liquidity, which requires both global macro-level liquidity easing and the ecological development of the crypto market itself, particularly the stability of core assets and the implementation of application scenarios to attract continuous inflow of off-market funds.
The various phenomena in the current market are external manifestations of the underlying logic of assets. Whether it's the demand and consensus for precious metals, the banding and differentiation in the US stock market, or the silence of altcoins, all ultimately point to the matching relationship between liquidity and asset value. For the crypto industry, only by deeply cultivating its own ecology and closely following the rhythm of the macro market can it find its own development direction amidst market fluctuations.
